On a windy coastal bluff, a complex of plain-looking buildings where Los Angeles is trying to convert sewage into cheap electric power serves as a $350-million warning to other cities about gambling on high technology.

Two years after it was supposed to be ready, the Hyperion Energy Recovery System has yet to burn even a day's worth of sewage.

After more than 2,000 design changes and a yearlong string of fires and other snarls, the system's designers concede that they don't know when the labyrinth of pipes and boilers will begin to work. Further, they admit now that the system cannot be counted on ever to burn all the Los Angeles sewage, a major retreat from promises that were made to sell the system to city officials.

Since work began in 1980, costs have tripled, and the share to be borne by Los Angeles taxpayers, once a mere $12 million, has soared to $155 million, city records show.

Yaroslavsky a Critic

"It has been a disaster," said Councilman Zev Yaroslavsky, a frequent critic. "If anything could go wrong, it did."

This was not the scenario envisioned when Mayor Tom Bradley and the Los Angeles City Council decided to gamble on a vaunted but untested new technology for processing sludge, the vilest portion of the waste flushed through sewers.

The HERS system, as it is known to engineers throughout the country, was supposed to be the state-of-the-art alternative to piping the sludge out to sea, a practice Los Angeles was under a federal court order to halt. The system would burn every bit of the sludge and also reduce the city's reliance on foreign oil.

Physically, the system is nearly complete. But in the last year, several fires have erupted as the engineers try to coax the machinery into handling the volatile sludge, including a stubborn blaze last February that took a week to douse and caused a costly five-month delay. Engineers also found that major parts were poorly designed and needed to be junked. A key contractor, fired in 1986 for allegedly slowing the project down, filed a $30-million lawsuit against the city.

Even the most loyal engineers on the project have grown discouraged. "We've been trying to bring this up on line for about a year," said William Hartnett, a top engineer with Foster Wheeler Corp., who is known around the HERS complex as Captain Sludge. "It's been one battle after another."

When conceived in the late 1970s, the HERS system was hailed by city officials as the most ambitious public works project ever undertaken by Los Angeles.

It uses a process first conceived as a way to extract vitamins from fish livers, but never tried on urban sewage. The process was designed to dry the sludge and use it as the fuel to generate enough electricity to power 40,000 typical homes. The latest pollution controls would prevent the creation of smog, and only a harmless ash would be left behind.

Built Without Controversy

Best of all, city officials figured, the whole system could be built without controversy on a corner of the city's sprawling Hyperion sewage treatment plant on the coast near El Segundo.

Hyperion is where sludge is extracted from the sewage and--until last November--was piped out to sea. Engineers thought that it would be a simple matter to divert the sludge into the new HERS system.

The alternative, building a sludge pipeline across Los Angeles County to the desert, would bring a political wrath down on City Hall. With HERS, the obstacle was technical, not social, and the city was stocked with skilled engineers.

"If it had worked, we would be trotted out as a big success," said Bradley Smith, the top city engineer involved in HERS from the beginning, as 1987 ended.

Engineers first promised to have HERS working by July, 1985. That was the deadline agreed on to settle a lawsuit against the city by the EPA and state of California. Last year, in a revised settlement, the city said HERS would be working by no later than 1989. In October, the city told federal Appeals Court Judge Harry Pregerson, who is overseeing the EPA suit, that the system would be done by early this year.

No More Predictions

City engineers refuse now to make any more predictions about completion. Ralph Kennedy, the veteran engineer brought in three years ago to finish the job, said it would only be "guesswork." But he said that once full testing has started, "I expect we'll have five more years to really get it polished off."

In recent months, the recurring problems forced city officials to switch their thinking on HERS. Instead of burning all the sludge, the system would only be counted on to burn a portion. "I think it's still a viable concept," Smith said. "But today we might have a different version of what 'operating' means."